Month: December 2018

“It’s Our Right” – College Students Demand Eight Hours Of Sleep Every Night

Authored by Zachary Petrizzo via The College Fix,

“Everyone deserves 8 hours of sleep!”

Causes advanced by democratic socialists are many: tuition-free college, universal health care, a federal jobs guarantee, a “living wage,” and much more.

Now they’re adding a new “right” to the list – the right to eight hours of sleep per night. Apparently, gone are the days when pulling an all-nighter is a rite of passage for college kids.

A group of democratic socialist students at the Georgia Institute of Technology has launched a campaign demanding that campus leaders allow for eight hours of sleep every night.

“We’re beginning our 8 Hours Campaign! If you are not getting enough sleep due to coursework overload or academic committments [sic], email us! We will advocate for you; confronting professors, challenging administration, and so forth to make a real committment [sic] to the health of every student. Everyone deserves 8 hours of sleep,” stated an emailed memo from the Young Democratic Socialists of America at Georgia Tech obtained by The College Fix.

The email was sent out in early November, and the group has since upped the ante.

More recently, on Dec. 6, it published an open letter to university President George Peterson outlining their formal grievances regarding mental health on campus and alluding to students’ suffering sleep cycles.

“Some professors still hold their students to unreasonable expectations. There are professors who announce to their students that losing sleep and pulling all-nighters to finish assignments is expected for them to excel in the course,” the letter states.

“ … This behavior is unacceptable.”

The letter also calls for the university to hire more counselors and psychiatrists, and demands that the campus make classes easier and less competitive and reduce student coursework.

“Classes should be graded based on students learning course material as well as transparent criteria of course objectives, instead of through opaque bell curves that pit students against each other,” the letter states.

They also want campus leaders to “eliminate all fees for psychiatry appointments.”

So far, hundreds of students have signed the letter. As for the letters’ signers, some have expressed praise for the YDSA chapter for fighting for healthcare, calling it a “right.”

The College Fix has reached out multiple times to members of the Young Democratic Socialists of America at Georgia Tech for comment. They have ignored those requests.

But in addition to calling for eight hours of sleep every night, they have also begun calling for eight hours of free time, too.

With the growing popularity of Congresswoman Alexandria Ocasio-Cortez and democratic socialism among young people, the Young Democratic Socialists of America has not steered away from controversy. Earlier this year the national organization urged socialists to “infiltrate” higher education, while more recently the Georgia Tech chapter launched a petition to disinvite Condoleezza Rice from speaking at the university’s December commencement.

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Trump Picks Mick Mulvaney As Acting Chief Of Staff

Hours after Chris Christie became the latest contender to turn down an offer to lead the White House staff, President Trump has revealed that OMB Director Mick Mulvaney will take the chief of staff job on a temporary basis as the president continues his search for a permanent replacement for John Kelly, who is set to leave his post at the end of the year.

The announcement comes after Kellyanne Conway said Friday afternoon that Trump has five names on his “shortlist” of candidates, and after several top contenders (including Mulvaney and the presumptive Kelly replacement, Nick Ayers) turned down the job. 

Mulvaney is already running the Office of Management and Budget and the Consumer Financial Protection Bureau. With this latest job title added to his resume, Mulvaney now rivals Jared Kushner for the Trump Administration member with the most responsibilities.

 

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FBI Disobeys Judge; Submits Ham-Handed “302” Summary Of Flynn Interview From Six Months Later

Days before retired Army Lt. Gen Michael Flynn was set to be sentenced, Judge Emmet G. Sullivan ordered the Justice Department to produce interview records from their meeting with the former National Security Adviser Mike Flynn amid a filing by Flynn’s legal team suggesting that he was pressured or tricked into lying by the FBI.

Flynn pleaded guilty to one count of lying about his contacts with then-Russian ambassador Sergey Kislyak, wiretapped phone calls of which the FBI had seen transcripts. After FBI agents interviewed Flynn, they would have written up a summary of the meeting in a report known as a “302,” which is used by FBI agents to “report or summarize the interviews they conduct” with witnesses or suspects, and are typically filed within days of the interview. 

The 302 sought by Judge Sullivan would undoubtedly shed light on the FBI’s thought process and conduct surrounding the Flynn interview – as it was reported in February that the agents interviewing him, Peter Strzok and Joe Pientka, did not think Flynn was lying.

Thus, Judge Sullivan’s demand for the 302 summary of Flynn’s interview would have likely cleared things up. Unfortunately, the Department of Justice just submitted a “302” interview of Strzok’s account of the Flynn interview – which was conducted six months after the fact. 

In June, Rep. Mark Meadows (R-NC) suggested in an interview with The Hill that the Flynn 302 reports had possibly been tampered with.

Meadows, the leader of the conservative House Freedom Caucus and a close ally of President Trump’s, said he and other lawmakers are finding evidence of possible tampering, an allegation he previously made at a House hearing where Justice Department Inspector General Michael Horowitz testified.

…

“I brought this up with the inspector general the other day.  Some of those key witness will be asked to appear before House Oversight,” he added.

The question about the FBI interview reports, he said, was “were they changed to change the outcome of prosecution decisions. I think they might have.” –The Hill

Meanwhile, according to a sentencing memo filed Tuesday by Flynn’s attorneys, the FBI’s Andrew McCabe convinced Flynn not to have a lawyer present, and the FBI decided not to advise him of the penalties for lying. 

Flynn’s legal team argued earlier this week in a sentencing memorandum that while he maintains his guilty plea, he was “unguarded” during the January 24, 2017 interview. 

Despite recommending no jail time in a filing last week due to his “significant” cooperation in the Mueller investigation, the special counsel pushed back on Flynn’s comments that he was “unguarded,” writing in a filing: “The defendant chose to make false statements about his communications with the Russian ambassador weeks before the FBI interview when he lied about that topic to the media, the incoming Vice President, and other members of the Presidential Transition Team,” adding “Nothing about the way the interview was arranged or conducted caused the defendant to make false statements to the FBI.” 

“The defendant agreed to meet with the FBI agents, without counsel, and answer their questions. His [Flynn’s] obligation to provide truthful information came with that agreement; it did not turn on the presence of counsel.” 

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In Just 2 Years, US Debt Grew The Size Of The Entire Brazilian Economy

Authored by Mac Slavo via SHTFplan.com,

In a mere two years, the United States debt has massively grown.  In fact, the amount of debt the US incurred equaled the size of the entire Brazilian economy.

U.S. government debt is on track this year to rise at the fastest pace since 2012,reported the Los Angeles Times.  The strong yet quickly weakening economy is failing to keep pace with the wave of red ink that’s rising under the Trump administration and there appears to be no end to the spending in sight.

The total public debt outstanding has jumped by $1.36 trillion, or 6.6%, since the start of 2018, and by $1.9 trillion since President Trump took office, according to the latest Treasury Department figures. The latter figure is about the size of Brazil’s gross domestic product.

As of Monday, the nation’s debt stood at a record $21.9 trillion. The borrowing is needed to cover a budget deficit that expanded by an estimated $779 billion in Trump’s first full fiscal year as president, the widest fiscal gap in six years, since Barack Obama’s term. By the end of Trump’s first term, the debt is expected to rise by $4.4 trillion despite historically low unemployment, relatively low interest rates and robust growth.

In other words; the United States is actively committing suicide.

Debt has become the default, but at some point, the entire system will crumble.

Government funding for some agencies runs out after December 21 barring an agreement over the budget, while the statutory debt limit has been temporarily suspended through March 1, though the Treasury can take measures to keep paying the government’s bills for a few more months.

Without extreme debt conditions, economic downturns cannot be created (or at least sustained for long periods of time). According to the amount of debt weighing down a system, banking institutions can predict the outcomes of certain actions and also influence certain end results. For example, if the Fed was interested in conjuring a debt based bubble, a classic strategy would be to set interest rates artificially low for far too long. Conversely, raising interest rates into economic weakness is a strategy that can be employed in order to collapse a bubble. This is what launched the Great Depression, it is what ignited the crash of 2008, and it is what’s going on today.

– Brandon Smith, Alt-Market.com

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Absolute Mayhem In Manhattan Court As Mueller May Have Made A Move 

Reporters who had descended on a Manhattan courthouse on Friday grew frustrated as a “dramatic scene” unfolded which may or may not have something to do with special counsel Robert Mueller, according to BuzzFeed News. 

The US Court of Appeals for the DC Circuit heard Friday morning arguments involving a grand jury matter that is currently sealed – a typical practice while cases are pending. The publicly available information on the case offer little clues as to what’s going on, as there are no description of the subject of the case, no information on the parties or their lawyers, and no public access to the documents. 

The tight-lipped approach of Mueller and his team has led to rampant speculation and curiosity. In October, Politico reported that on the day a filing was due in the sealed grand jury case, a journalist overheard a man in the clerk’s office request a copy of the special counsel office’s latest sealed filing so that the man’s law firm could put together a response. Several hours later, a sealed response was filed in the grand jury case.

It was not confirmation that the sealed grand jury case was indeed related to Mueller’s investigation, but it was enough to make Friday’s arguments a must-attend event. –BuzzFeed

What makes this interesting is that the federal court in DC is where Mueller’s team has brought most of their cases – as there have been two other grand jury matters we know about in front of said court; one relates to Paul Manafort and the other is still pending in the DC Circuit involving former Roger Stone associate Andrew Miller. 

Reporters began to gather more than an hour before arguments were scheduled to begin at 9:30 a.m., however no members of Mueller’s team, anyone connected to the Russia investigation, or anyone from the Trump administration were spotted. After arguments began, reporters began to huddle outside the courtroom in the hopes of discovering more about the case. 

The first case was argued. Then the second. Still nothing. At the end of arguments in the second case, court employees instructed everyone in the courtroom to leave. Court staff and security officials then cleared the entire floor, an unusual occurrence in the courthouse. Reporters scattered, staking out other hallways, stairwells, and exits. At one point at least 20 journalists roamed the courthouse building and its grounds.

After roughly an hour and a half, reporters were allowed back onto the floor, although the courtroom was locked and it wasn’t clear if arguments had ended. A little after noon, the courtroom deputy confirmed that the judges were, in fact, done hearing arguments for the day.

“I’m ready to go to sleep forever,” one reporter was heard saying as she boarded an elevator to leave. –BuzzFeed

In short – something apparently big happened today in a Manhattan court, which may or may not involve the special counsel’s investigation, and nobody knows anything about the case outside of public records showing that the sealed grand jury case was filed in August, made two trips to the DC circuit, lost one appeal – and a second appeal was heard by a three-judge panel on Friday. 

Until we know more, this is much ado about nothing. 

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Trump’s Border Wall Is a Bad Idea. So Is a Government Shutdown.

With each passing day, it looks more and more likely that a partial government shutdown could happen in the next month unless Congress agrees to allocate $5 billion for President Donald Trump’s proposed wall on the U.S.-Mexico border. If Congress won’t fund his wall, Trump says he’s willing to take responsibility for a shutdown.

There are a few ways this could play out, but unless Trump folds, it’s a no-win situation. That’s because building a border wall is a bad idea, and so is shutting down the government.

Scenario 1: Trump gets his wall funding and the federal government stays open

In this scenario, Congress agrees to provide $5 billion for the wall, and Trump signs the spending deal into law before midnight on December 21. While this would keep the government fully funded, it would also be a waste of $5 billion.

Trump has been obsessed with illegal immigration since the early days of his campaign, and his preferred solution is a wall. The wall would supposedly keep Mexicans and other Central Americans from entering the U.S., but as Reason‘s Shikha Dalmia explained in January, net migration flows have actually reversed in recent years. Now, more Mexicans are trying to leave the U.S. than are attempting to enter. The pro-wall argument also assumes that illegal immigration to the U.S. is a bad thing, which isn’t true. Illegal immigrants are less prone to commit crimes than native-born Americans. In fact, studies suggest that undocumented immigration is actually linked to decreased crime.

There are plenty of practical considerations to take into account as well. For instance, the federal government doesn’t actually own more than two-thirds of the land on the southern border with Mexico. And even if Trump was able to get the wall built, it would likely take additional Border Patrol agents and technology to apprehend potential border-crossers. Plus, the wall would do nothing to stop illegal immigrants who came to the U.S. legally and overstayed their visas. Such immigrants make up about a third of the entire undocumented population.

Then there’s the fact that $5 billion would just be the start. Reason‘s Eric Boehm estimated in March that getting the wall up could cost up to $28 billion, which doesn’t include the $48.3 billion in maintenance costs over the first decade. While $5 billion is just a fraction of the wall’s total cost, the sunk-cost fallacy could cause Congress to eventually appropriate 10 times that amount with much less fanfare.

Thankfully, this appears to be the least likely scenario. While it’s possible the Republican-controlled House could approve a bill funding the wall, it would probably die in the Senate. Republicans hold a 51-49 majority, but Senate rules require that such bills receive the support of at least 60 senators. It’s highly unlikely that nine Democrats vote for border wall funding, which could mean:

Scenario 2: Trump doesn’t get his wall funding and the government partially shuts down

Unless Republicans and Democrats can agree on a spending deal in the next week, this is what will happen. To be clear, Trump has already approved $931 billion of the federal government’s roughly $1.2 trillion in proposed funding for the 2019 fiscal year, according to Bloomberg. As I explained on Tuesday, there are seven remaining spending bills that must be approved by the December 21 deadline in order to avoid a partial shutdown. They would fund the National Aeronautics and Space Administration (NASA), as well as the Departments of Justice, Commerce, Agriculture, and Homeland Security; the last of which is where Trump wants to direct border wall funding.

Lawmakers in both parties agree that Republicans don’t really have a plan of action moving forward. “There is no discernable plan. None that’s been disclosed,” said Senate Majority Whip John Cornyn (R–Texas). “I’ve not heard of any Republican who’s sitting down and figuring out how to get this through. There’s no plan,” added Sen. Patty Murray (D–Wash.).

Meanwhile, the House is out of session until Wednesday, when there will only be three days left to avoid a shutdown. So what happens if neither side budges? As is usually the case when it comes to a government shutdown, nothing good.

For one thing, it likely won’t save any money. Shutdowns have no effect on the roughly two-thirds of the federal budget that goes to entitlement spending.

Taxpayers aren’t saving on federal workers’ salaries, either. A fact sheet published by Democratic staffers on the Senate Appropriations Committee claims 380,000 non-essential federal workers will be furloughed. This includes the majority of workers at the Departments of Commerce and Housing and Urban Development, as well as NASA, the National Park Service, the Forest Service, and the IRS. They won’t be paid during the furlough, but after past government shutdowns, Congress has usually voted to give them back pay. Essentially, they will likely be paid for not working.

Another 420,000 essential employees will keep working without pay. However, like their furloughed colleagues, they’ll probably receive back pay once the shutdown is over.

This is probably a good time to point out that essential employees include federal workers who carry around guns. This includes 41,000 federal law enforcement and correctional officers like FBI and DEA agents. About 53,000 TSA agents will still be on the clock (a government shutdown doesn’t mean the government can’t grope you), as well as 54,000 Customs and Border Protection agents and officers. As Reason‘s Scott Shackford accurately noted when the government shut down in January: “The parts of the federal government authorized to shoot you are still functioning.”

But a shutdown can hurt private businesses. The fact is, there are so many hoops the government makes companies jump through that when a shutdown happens, some businesses have to stop what they’re doing until federal offices reopen.

This means the best scenario is

Scenario 3: Trump gives in and the shutdown is averted without border wall funding

According to Politico, there’s a chance Trump agrees to a bipartisan spending deal that includes funds for border security, but not a wall. While this wouldn’t do anything to reform the federal government’s wild spending habits, it would avoid a shutdown without giving in to Trump’s ridiculous demands. At least right now, that seems like the best we can hope for.

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Weekend Reading: Did The Grinch Steal Christmas?

Authored by Lance Roberts via RealInvestmentAdvice.com,

On Tuesday, we put on a small S&P 500 trading position for an oversold bounce. At first, it didn’t work and we were almost stopped out, but a late day rally kept us in the position.

Wednesday was a different picture as stocks rocketed out of the gate on more “trade talk” news with China, but that rally faded as well heading into late day as the owner of the “National Enquirer” was granted immunity in exchange for details on another Trump-related “hush money” payment.

Yesterday, the markets struggled out of the gate as economic data pointed to slowing rates of inflationary pressure and economic growth, fell into negative territory, and then ended the day flat.

This morning stocks opened down as concerns of global economic weakness rose from China.

So far, the “Santa Rally” has failed to appear and traders are beginning to wonder if they are on the “Naughty List”this year? With all of the rhetoric over trade, White House shenanigans, and weak economic data, it certainly would seem to be the case.

But, it may actually be more of the “Grinch (aka The Fed) That Stole Christmas” this year.

While the Fed’s rate hikes do indeed raise borrowing costs and slow economic growth, it is the extraction of liquidity from the markets which is most important. As shown in the chart below, the Fed is now reducing their flows by $50 billion each month. This is in direct contrast to the billions they were injecting previously which corresponds with the markets decade-long bull market despite weak revenue growth due to a sluggish economic expansion.

But it is no longer just the Fed. On Thursday, the European Central Bank made two important announcements.

  1. They will stop adding to its stock of government and corporate bonds at the end of December, and;

  2. They are seeing signs of weaker inflation and economic growth.

In other words, as world markets are beginning to struggle as the driver of the decade-long bull market is being removed.

But yet, despite the market turmoil this year, which certainly got investors attention, the debate has turned to whether the decline is over or has it just begun?

Dana Lyons had an interesting point earlier this week on the bout of selling.

“Specifically, regardless of the closing performance, the past 4 days have seen the S&P 500 drop at least 1.89% each day on an intra-day basis. That is just the 11th streak of such selling pressure in the S&P 500 going back to 1960, and the first since 2008. If we relax the parameter a bit to 4 straight intraday drops of at least 1.7%, we observe 17 occurrences going back to 1960. Many of them occurred at interesting market junctures.”

“As the chart displays, several of these instances occurred in the direct vicinity of cyclical market bottoms, including 1974, 1982, 1987, 2002 and 2009. That might give bulls some hope that perhaps things have gotten so bad, i.e., rock bottom, that there’s nowhere to go but up. Although, it is probably a stretch to conclude that we are at a cyclical low right now since we were at all-time highs just about 10 weeks ago. And looking back at the chart, we see that some of the other historical events, e.g., 1974, 2001, 2008, occurred during the meat of a bear market and saw stocks just continue to fall further, going ‘subterranean’ if you will.”

I agree with Dana that it is hard to imagine we are at a cyclical low when we were just pegging all-time highs a few short weeks ago. As noted by Barbara Kollmeyer, Jeff Gundlach may have this right:

“DoubleLine founder Jeff Gundlach, who told clients Tuesday evening that the S&P 500 could take out February’s 2018 low due to a growth slowdown hitting company profits.

‘Many equity markets are down over 20%, which some people call a bear market,’ Gundlach said in his latest webcast, according to Reuters. ‘I don’t really define bear markets as a certain fixed arbitrary percentage. I think of it more as mood. And certainly, the setup for the equity markets looked like a bear market going into the middle of this year…the global equity market which is strongly in a bear market at the present time.’

Bottom line, his mood is still bearish, considering he warned us in November that stocks still hadn’t hit a ‘panic low.’” 

While the Fed could certainly reduce, or even eliminate, their rate hike campaign, the extraction of liquidity is a much more problematic issue. Combined with still elevated valuation, weaker economic growth, and declining profit growth, it is highly likely that Lyons and Gundlach are correct in that the S&P 500 has yet to find a lasting bottom.

For now, “we have our stocking hung with care in hopes that Saint Nick will soon be there,” but don’t be surprised if you wind up with a “big lump of coal.”

Just something to think about as you catch up on your weekend reading list.

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Peter Atwater – Financial Insyghts

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“The market may be bad, but I slept like a baby last night. I woke up every hour and cried.“ – Anonymous

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Meltdown: Traders Tremble As Trump, Trade & Talc Trigger Turmoil

Well that was a week…

Despite The National Team’s efforts on Thursday, the week ended ugly in China…with CHINEXT (China’s small cap/tech heavy index) ending red after terrible economic data hit overnight…

 

European stocks ended the week higher, despite an ugly Friday…

 

And after a strong start which prompted every media type to claim the bottom is in, Thursday and Friday were a bloodbath…

 

The S&P 500 closed at its critical 2,600 support level…

 

US Small Caps broke to fresh 2018 lows – to their lowest since Sept 2017…

6th day of “sell the fucking rip” in a row…

 

Year-to-Date, all the majors except Nasdaq are back in the red…

All the major US equity indices are in correction (down 10%) or worse…

  • Dow -10.5% from highs

  • S&P -11.3% from highs – lowest weekly close since March 2018

  • Nasdaq Comp -14.6% from highs

  • Trannies -17.8% from highs – Nov 2017 lows, worst 2-week drop since Aug 2011

  • Russell 2000 -18.5% from highs – lowest since Sept 2017

The number of bulls in the AAII survey of U.S. retail investors suffered its biggest one-week decline since 2010 this week. In aggregate, sentiment is still nowhere near the overly pessimistic extremes that typically develop at major lows, but this freak out in the retail channel is a constructive development.

The S&P Banks and Financials indices are both down over 20% from their highs (in bear market)…

 

For The Big 4 Bulge Bracket Banks, December has been a bloodbath…

 

FANG stocks gave back the mid-week squeeze gains (down 23% from their highs)…

 

AAPL was hammered (down 29% from the highs)…so much for Monday afternoon’s panic-bid that CNBC crowed so loud about…

 

And JNJ crashed most since 2002 as cancer-causing talc headlines hammered the stocks down below its 200DMA (and dragged the Dow down 100pts alone). JNJ lost almost $35 billion market cap…

 

Tesla stock had another great week… but TSLA bonds didn’t – who do you believe?

 

Breadth is getting extremely weak with just 24% of all NYSE stocks now trading above thei 200DMAs…

 

And the S&P’s put/call ratio has crashed…

 

And the market’s implied correlation is soaring (implying traders using macro overlays to hedge and not being idiosyncratically careful)…

 

As soon as Tuesday/Wednesday’s short-squeeze ran out of ammo, the week went a little pear-shaped…

 

Credit markets actually rallied on the week in IG and HY spreads…

 

But Leveraged Loans were a bloodbath…

 

And stocks have a long way to catch down…

 

Treasuries rallied on the day as stocks stumbled with 30Y back to unchanged on the week…

 

And if equity markets are right, bond yields have a long way to fall…

2s5s remains inverted…

 

And as far as next week’s Fed meeting, odds of a hike have slumped (very weak this close to a meeting)…

And the market is now pricing in just 9.5bps of hikes in 2019, and a 10bps cut in rates in 2020…

 

The Dollar Index soared again today (best week since September) – touching its highest since May 2017 intraday…

 

Offshore Yuan roundtripped on the week

 

Cable plunged again (5th week in a row) to the lowest weekly close since April 2017… despite a rally on May’s confidence vote

 

Cryptos had another ugly week with Bitcoin Cash crashing 25% …

 

Despite the terrible China data, only copper ended the week higher in commodity-land as a strong dollar dragged down PMs and WTI algos went wild…

 

After two weekly gains (following 7 weeks straight down), WTI resumed its down trend this week testing back to a $50 handle…

 

Gold was lower in USDollars and in Yuan…

 

Finally, we note that after this week’s rounds of economic data disappointments, all of the major economies in the world are now in negative surprise territory (but ironically the US is least worst for now)… The Global macro surprise index is at 6-month lows

And this is probably nothing to worry about – the world’s most systemically important banks continue to collapse…

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“Inclusive” Hillary Tells Americans: “If You Don’t Support Democrats, Go Somewhere Else”

Hillary Clinton has a message for Bernie Bros, Democratic Socialists and other constituencies of the “Dirtbag Left”.

If you have a problem with the Democrats’ agenda (which, as Tucker Carlson explained in an interview last week, has shifted away from empowering “working class” Americans to favoring globalism, militarism and big business) then go vote for somebody else.

Demonstrating that she clearly hasn’t moved on from the embarrassment she suffered at the hands of Bernie Sanders, who nearly defeated her in the 2016 Democratic Primary after riding a wave of support for his socialist agenda (something that polls suggest is becoming increasingly popular with young Americans), Clinton lashed out during a recent interview at “progressives” who won’t stop attacking Democrats from the left.

She cited the abuse received by Kamala Harris – a potential 2020 contender (and potential Clinton rival) – as an example of why the left needs to come together and unify around whoever their party’s pick might be.

“Some of my favorite Democrats – people like Kamala Harris who’s out there speaking up and speaking out and is being attacked by the left – enough! If you don’t want to support Democrats, then go somewhere else.”

Her remarks are just the latest sign that she has learned nothing from her historic electoral loss to President Donald Trump. And that the DNC’s “mother knows best” strategy is stunningly out of touch with every day Americans.

Why shouldn’t progressives support Clinton? Look at her many “progressive” accomplishments: Instigating a destructive civil war in Libya, gladhanding with the Saudis, Russians and other foreign powers under the auspices of the Clinton Foundation and helping to deregulate the financial services industry in the years before the financial crisis and generally promising to support free trade, corporate welfare and a robust, muscular US military presence around the world. 

When Bernie Sanders – who is still the standard-bearer of the American socialist movement – advocated for a $15 minimum wage, Clinton one-upped him by suggesting we go to $12 instead.

But it’s not like disillusioned Democrats have anywhere else to turn…oh wait.

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Why The OPEC+ Deal Won’t Cut It

Authored by Nick Cunningham of Oilprice.com,

Now nearly a week removed from the OPEC+ agreement, confidence in the efficacy of the deal is becoming shaky.

Immediately after OPEC+ announced cuts of 1.2 million barrels per day (mb/d), a flurry of reports from oil analysts and investment banks congratulated the group on a job well done. After all, the 1.2 mb/d figure was larger than the market had anticipated.

However, reality is beginning to set in. First, the cuts might not be realized in January, despite the promise. Russia indicated that it was going to slow walk the cuts, phasing in an initial 50,000 to 60,000 bpd in reductions in January. This is significant because Russia is the main actor in the non-OPEC cohort. The non-OPEC group is expected to slash output by 400,000 bpd, but if Russia is only going to do its part gradually over the next few months, the non-OPEC cuts might not reach the promised levels anytime soon. Moreover, because there are no country-specific allotments, it will be hard to hold any producer accountable.

That undermines confidence in the deal.

“Compared to early last week, the outcome was rather disappointing, the whole process wasn’t convincing, and it’s still uncertain whether they will actually cut,” ABN Amro senior energy economist Hans van Cleef told Bloomberg.

While oil traders are suddenly doubting the integrity of the deal, even if OPEC+ were to adhere to its promised cuts, it still might not be enough. That’s because there are other factors that could leave the market oversupplied. Cracks in the global economy are growing, demand is showing signs of strain, and supply continues to rise.

The EIA just issued its latest Short-Term Energy Outlook, and the agency still expects significant production growth from U.S. shale despite the downturn in prices. The EIA lowered its forecasted 2019 WTI prices by $10 per barrel from its previous report, yet it kept its supply forecast unchanged – it still thinks that U.S. oil production will rise from 10.9 mb/d in 2018 to 12.1 mb/d in 2019, despite the significant downward revision in prices.

In other words, U.S. shale production may not be slowed by the recent downturn in prices in any dramatic way, and at the same time, with its production cut agreement, OPEC+ reassured shale executives that it wouldn’t let prices fall any lower.

“The US is not only the world’s largest oil producer at present, but will also remain the leading marginal producer in future,” Commerzbank said in a note.

According to Rystad Energy, OPEC+ would need to cut an additional 700,000 bpd in order to balance the market and bring Brent back up to $70 per barrel.

“The  OPEC+ agreement predictably came up short of what Rystad Energy argued would be required to fully balance the market in 2019,” Bjornar Tonhaugen, Rystad Energy head of oil market research, said in a statement.

“The agreed production cuts will not be enough to ensure sustained and immediate recovery in oil prices. The muted market reaction seen thus far comes as no surprise to us.”

Rystad says that the cuts agreed to in Vienna provide a “soft floor” beneath oil prices for now, and the group can still succeed if it extends the cuts through the end of 2019. The OPEC+ coalition is set to evaluate the progress of the cuts in April and might decide to extend the cuts in June if they feel the market needs more time.

“Most likely, OPEC will be forced to conduct production management sporadically over the next few years, unless US shale supply grows even faster than we currently expect. OPEC members have their work cut out for them in the years to come,” Rystad’s Tonhaugen said.

The supply surplus could still be eliminated by unplanned outages. Libya just lost 400,000 bpd because of encroaching militias, according to the National Oil Corp. Venezuela and Iran are also set to continue to lose output, while Nigeria remains a risk. These events are impossible to predict, and they could quickly erase any supply overhang.

For now, though, the oil market is not convinced that the OPEC+ cuts will be sufficient to significantly increase oil prices, despite the initial euphoria surrounding the Vienna agreement.

via RSS https://ift.tt/2BkI3Vr Tyler Durden